How to Setup MERS Defined Contributions

The following procedures will help you in setting up Pro Fund Accounting Payroll to enable the support for MERS Defined Contribution plans.

Special Note
Please note that this new procedure should be started AT THE BEGINNING OF A MONTH.

Payroll Setup
A special deduction code is to define each participating employee’s contribution. You can use any Deduction Code you desire, but something like MDC would be easily remembered. In the Deductions’ description there must be ‘MERS’ and ‘Contribution’ present. For example: “MERS Defined Contribution”. Multiple deduction codes can be set up as your needs dictate.

  • Short Name: Can be anything, for example, ‘MERS DC’
  • Calc Type: Can be any valid calculation type, EXCEPT 12 (the standard MERS calculation). 6 for flat amount and/or percent is preferred.
  • Deferred Comp Flag: Needs to be checked
  • Calc Order: Should be 28
  • W2Info: Should be 414-H2
  • Tax Code: Should be Box 14

In the deduction’s ‘PR/PRS Parameters Titles’ tab:

  • Parameter 3 description should be set to ‘Match Amt’
  • Parameter 5 description should be set to ‘Match Pct’
  • These titles will then show up when adding or editing the deduction code for an employee

Employee Setup
Each participating employee should have this deduction code added to their list of deductions. The parameters will vary depending on the calculation type you specified.
Matching amounts are defined on the employee’s deduction code parameters dialog by filling in the Match Amt and Match Pct fields. If the match is 100%, then 100.00 should be entered in the Match Pct field.

Creation of the MERS Defined Contribution Data File
The MERS Defined Contribution data file is created once a month. Under the Payroll menu item, click on the ‘MERS Contribution File’ entry and a
dialog will appear title ‘MERS Contribution Plan Datafile creation’. This is similar
in layout and operation as the MERS EPass program.

  • Enter the first day of the month that you will be reporting
  • Enter the MERS Plan Name
  • Enter MERS Plan number (6 digits)
  • Enter IRS Number (9 digits, no dashes)
    • The last 3 items will be saved and will appear automatically each time
      you run the program
  • Once the above “header” information is entered, press the FIND PAYROLL
    DATES BUTTON. This will cause the Deduction codes that have in their
    description the words ‘MERS’ and ‘CONTRIBUTION’ to be listed. This
    confirms that there are valid MERS Defined Contribution deductions defined
    and that they have been used in a payroll calculation. There will also be listed
    the payroll dates of payrolls where those deduction codes have to be used to
    create deductions.
  • Press the ‘Create MERS Contribution File’ button to create the file. You will
    receive a confirmation of the files creation and the total amount of the
    contributions. The file will be named ‘MERS Contribution xxxxxx.txt’ where the
    ‘xxxxxx’ will be your MERS Defined Contribution plan number. The file is
    usually stored in the Pro Fund Accounting Output directory.

(Employer) Matching Amounts
Unlike the employee’s Defined contribution that is arrived at by the deduction code
and its calculation type, the employer’s matching amount (if any) is not defined by
a separate deduction calculation since the amounts are not deducted from the
employee’s paycheck. Instead, the matching amount is calculated at the time the
data file is created based upon the contents of the ‘Match Amt’ and ‘Match Pct’
parameter fields.

In the Reports/Payroll folder, there is a new report named MERS Defined
Contribution List. Parameters include date range, employees, deduction
codes and others. It shows details and total of the contribution amount and the
match amount.